Feb 01, 2021 09:45 AM

China’s Manufacturing Recovery Loses Momentum, Caixin PMI Shows

China’s manufacturing recovery continued to lose momentum in the first month of 2021 as supply and demand growth slowed amid the coronavirus pandemic, a Caixin-sponsored survey showed.

The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the country’s manufacturing sector, dropped to 51.5 in January from 53 the previous month, according to a report released Monday.

A number above 50 indicates an expansion in activity, while a reading below that signals a contraction. The January reading, while marking the ninth straight month of expansion, was the lowest in seven months and represented a further decline from November’s reading, which was the highest since late 2010.

Wang Zhe, a senior economist at Caixin Insight Group, said that China’s manufacturing sector continued its post-epidemic recovery, but suffered a marginal slowdown in January as supply and demand growth eased amid subdued overseas demand.

The survey, which was carried out between Jan. 11 and Jan. 20, showed that firms signaled notably weaker growth in output and total new work, with the subindex for output hitting the lowest since April, and the one for new orders the lowest since June.


The slowdown was due in part to a renewed drop in new export orders, which fell for the first time in six months, as the resurgence of the domestic epidemic and the ongoing pandemic weighed on both domestic and foreign demand, according to the survey.

As market demand expanded slower than expected, the gauge for manufacturers’ quantity of purchases in January fell from the previous month, although it remained in expansionary territory.

Meanwhile, companies took a more cautious approach to hiring in January, as the slower growth in both supply and demand added to pressure on the labor market, according to the survey. Broadly speaking, the manufacturing workforce shrank slightly from the previous month.

Manufacturers in China reported sharp increases in both input costs and output prices in January.

Prices of raw materials, especially industrial metals, jumped, helping to keep the gauge for input costs near December’s three-year high. Supply shortages and shipping delays also led to a further increase in delivery times for inputs, adding to upward pressure on costs.

As a result, firms raised their sales prices at the steepest rate since June 2018, in an effort to protect their profit margins, according to the survey.

Manufacturing companies maintained a positive outlook for their businesses over the next 12 months as the gauge for future output expectations remained comfortably above 50. However, there were signs companies were worrying about the sustainability of the recovery, as the gauge was down from December’s reading.

Specifically, companies were concerned about the resurgence of the virus at home and abroad, and the potential for further disruption to operations and supply chains, the survey said.

China’s official manufacturing PMI, released by the National Bureau of Statistics on Sunday, dipped to 51.3 (link in Chinese) in January from 51.9 the previous month. The official PMI polls a larger proportion of big companies and state-owned enterprises than the Caixin PMI, which is compiled by IHS Markit.

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Update: With 2.3% Growth, China Likely to Be Only Major Economy to Expand in 2020

Contact reporter Luo Meihan ( and editor Michael Bellart (

Read more about Caixin’s economic indexes.

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